U.S. dollar closes lower on Taipei forex (update)

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Taipei--The U.S. dollar fell against the Taiwan dollar on Wednesday, shedding NT$0.004 to close at NT$30.252 as local traders took their cue from a strong showing by the local equity market to cut their holdings in the U.S. currency, dealers said.

The greenback opened at US$30.245 and moved between NT$30.195 and NT$30.279 before the close of trading. Turnover totaled US$671 million during the session.

Soon after the local foreign exchange opened, the U.S. dollar fell against the Taiwan dollar on a mild correction, but then regained its footing in the wake of weakness shown by other regional currencies, dealers said.

The Chinese yuan, in particular, fell to a more than nine month low against the U.S. dollar at one point after the People's Bank of China lowered the yuan's reference rate against the greenback, which pushed the Taiwan dollar down, they said.

The U.S. dollar's strength continued during most of the morning session before selling set in as the local equity market steamed ahead with investors rushing to pick up large-cap electronics stocks, in particular in the Apple Inc. supply chain, dealers said.

Dealers said that buying in local high-tech stocks largely came from foreign institutional investors, pushing the Taiwan dollar into positive territory.

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$8.7 billion (US$288 million) worth of shares on the main board, sending the weighted index up 0.79 percent at the close of trading.

Despite the losses suffered by the U.S. dollar, the greenback still moved in a narrow range with no clear direction, dealers said, adding that such slow movement could continue in the short term.

Many local traders preferred to stay on the sidelines for the moment before Washington releases its non-farm payroll data for July on Friday, which could serve as an important indication as to how the U.S. Federal Reserve will carry out its rate hike cycle, dealers said.

Currency traders, especially, are watching closely when and how the Fed will downside its balance sheet by cutting bond assets, dealers added.

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